Federal judge blocks new RAC contracts

Adding to the ongoing controversy around Medicare's Recovery Audit Contractor program, a judge has ruled that the government cannot award new RAC contracts until disputed payment terms are resolved.

Long-term care and other providers are watching the RAC contract process because current audits have been largely put on hold. The Centers for Medicare & Medicaid Services has indicated that the awarding of new contracts is one of the steps toward re-starting audits, which providers have protested are too aggressive and have led to a huge backlog of appeals. Citing “continued delay in awarding new Recovery Auditor contracts,” CMS restarted some reviews in August.

CGI Federal, a current RAC, cited this discontent with the program in its Aug. 27 court filing. It said that CMS would not be significantly harmed by holding off on awarding the contracts, as proven by the agency's statements that the pause in RAC activity provides an opportunity to “refine and improve” the program.

CGI's complaint is that it would take three to 10 times as long for auditors to receive payments under provisions of the current contract requisitions, according to its filing with the U.S. Court of Federal Claims. That court already has conceded that “[u]nder standard commercial practice in the recovery audit industry, a RAC invoices its commission payment immediately after the payer recoups the improperly paid claim,” CGI wrote. Federal contracts are supposed to reflect standard commercial practice, as part of the effort to encourage private companies to work with public entities.

Judge Mary Ellen Coster Williams granted the injunction on Tuesday, ordering that new contracts cannot be awarded until CGI's challenge goes through the full legal process. This typically would take nine to 11 months, but CGI will request expedited consideration, according to court documents.